20 August 2018

Zimbabwe: Stock Brokers Critical for C-Trade

C-Trade will not dilute the role of stock brokers as they will remain relevant in the workings of the local capital market, Securities and Exchange Commission of Zimbabwe (SECZ) chief executive Tafadzwa Chinamo has said.

C-Trade is a platform that enables investors, both local and foreign to purchase securities from anywhere in the world anytime, using mobile devices. The platform was launched in July.

According to the current rules of the exchange, trading goes through a broker. This way, Mr Chinamo said, helps ease any challenges that may arise when individuals are allowed to trade directly on their own from the exchange.

"When you download the application, you create an account on your mobile. That account links you to custodians and brokers. Brokers are relevant in the sense that the exchange, according to its rules can only accept a trade that comes through them," he said in an interview.

"The exchange wants to be sure that the person interacting with them understands the rules and regulations. You cannot trade directly on your own, If anything goes wrong there is very little the exchange can do, but brokers know exactly what to do and what not to do which is why they are relevant," said Mr Chinamo.

C-Trade was launched by President Mnangagwa, becoming the first of its kind in the Sub Saharan African region.

The initiative also seeks to promote financial inclusion through encouraging participation by the smallest retail investor.

It is estimated that the level of financial inclusion in capital markets is very low at one percent on the misconception they are elitist.

Prior to the launch of C-Trade, only around 7 000 individuals were active on the local capital markets.

But within a few weeks of its launch, over 4 000 accounts had been opened although people still needed time to learn about the platform and understand its functionalities.

The platform allows one to place an order to buy or sell shares listed on the stock exchange; view the shares that one owns on one's Internet-enabled device, access to real-time market data such as prices of shares, volume traded, bids, offers and integrates or links the investor, the broker, the ZSE and the Central Securities Depository (CSD).

The Zimbabwe Stock Exchange (ZSE) and the Financial Securities Exchange (Private) Limited (FINSEC) already have systems in place that list and trade bonds.

Meanwhile, Mr Chinamo said prospects for the capital markets were largely depended on performance of the economy, which influences investor sentiment.

"If the economy is doing well, people buy shares," he said.

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